FORM OF

                          CONVERTIBLE SUBORDINATED NOTE

                       as amended through October 31, 1999
                                                                October 31, 1996

         1. HealthCare  Capital Corp., a corporation duly organized and existing
under the laws of the Province of Alberta, Canada ("HealthCare"), and HealthCare
Hearing Clinics,  Inc., a corporation duly organized and existing under the laws
of the State of  Washington  ("HHC"),  for value  received  hereby  jointly  and
severally  promise  to pay to the  order of  ------------------  ("Holder")  the
principal  sum of  ------------------------------------,  without  interest,  on
August      1,      1999,      at     the      office      of      Holder     at
-----------------------------------------,  or at such other place as Holder may
designate in writing,  in such coin or currency of the United  States of America
as at the time of payment is legal  tender for the payment of public and private
debts.  HealthCare and HHC are sometimes  collectively referred to herein as the
"Companies".

         2. Deleted.

         3. The  Companies,  for  themselves  and their  successors and assigns,
covenant and agree, and by its acceptance  hereof Holder likewise  covenants and
agrees,  that the  payment  of the  principal  of this note is hereby  expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all Senior Indebtedness.  As used herein
"Senior  Indebtedness"  means the principal of (and premium,  if any) and unpaid
interest on  indebtedness  for borrowed  money of HealthCare  or HHC  (including
guarantees by HealthCare or HHC of  indebtedness  for borrowed money of others),
whether outstanding on the date hereof or hereafter created, incurred,  assumed,
or guaranteed.

         4.  Upon any  distribution  of  assets  by  HealthCare  or HHC upon any
dissolution, winding up, liquidation, or reorganization of HealthCare or HHC, as
the  case  may  be,  whether  in  bankruptcy,  insolvency,   reorganization,  or
receivership  proceedings  or upon an assignment for the benefit of creditors or
any other  marshalling of the assets and liabilities of HealthCare or HHC or any
other winding up of the Companies  (subject to the power of a court of competent
jurisdiction to make other equitable  provision  reflecting the rights conferred
hereby upon the Senior Indebtedness and the holders thereof with respect to this
note and Holder by a lawful plan of reorganization  under applicable  bankruptcy
law):

             (a)  The holders of all Senior Indebtedness shall first be entitled
                  to  receive  payment  in full of the  principal  thereof  (and
                  premium, if any) and the interest due thereon before Holder is
                  entitled  to  receive  any  payment   upon  the   indebtedness
                  evidenced by this note;

             (b)  Any payment or  distribution of assets of the Companies of any
                  kind or character,  whether in cash, property,  or securities,
                  to which Holder would be entitled except for the provisions of
                  this  Section 4 shall be paid by the  liquidating  trustee  or
                  agent or other  person  making such  payment or  distribution,
                  whether a trustee in  bankruptcy,  a receiver  or  liquidating
                  trustee or otherwise, directly to the holders

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<PAGE>

                  of   Senior   Indebtedness   or   their    representative   or
                  representatives  or to  the  trustee  or  trustees  under  any
                  indenture under which any  instruments  evidencing any of such
                  Senior Indebtedness may have been issued,  ratably accordingly
                  to the aggregate  amounts  remaining  unpaid on account of the
                  principal of (and premium,  if any) and interest on the Senior
                  Indebtedness  held  or  represented  by  each,  to the  extent
                  necessary to make  payment in full of all Senior  Indebtedness
                  remaining  unpaid,  after  giving  effect  to  any  concurrent
                  payment  or   distribution  to  the  holders  of  such  Senior
                  Indebtedness; and

             (c)  In the event that,  notwithstanding the foregoing, any payment
                  or  distribution  of  assets of the  Companies  of any kind or
                  character,  whether in cash, property, or securities, shall be
                  received by Holder before all Senior  Indebtedness  is paid in
                  full, such payment or  distribution  shall be paid over to the
                  holders of such Senior Indebtedness or their representative or
                  representatives  or to  the  trustee  or  trustees  under  any
                  indenture under which any  instruments  evidencing any of such
                  Senior   Indebtedness   may  have  been  issued,   ratably  as
                  aforesaid,  for  application  to the  payment  of  all  Senior
                  Indebtedness   remaining   unpaid   until   all  such   Senior
                  Indebtedness shall have been paid in full, after giving effect
                  to any concurrent  payment or  distribution  to the holders of
                  such Senior  Indebtedness;  provided,  however,  that any such
                  payment  or  distribution  received  by  Holder  shall  not be
                  required   to  be  paid  over  to  a  holder  of  such  Senior
                  Indebtedness  as  aforesaid if upon notice from Holder to such
                  holder of Senior  Indebtedness,  which notice shall state that
                  such payment or  distribution  has been received by Holder and
                  request that such holder notify Holder of the amounts then due
                  and owing to such  holder on such  Senior  Indebtedness,  such
                  holder of such  Senior  Indebtedness  shall  fail to so notify
                  Holder of such amounts then due and owing.  The  provisions of
                  this   paragraph  (c)  shall  not  apply  to  any  payment  or
                  distribution of assets received by Holder prior to the date of
                  any distribution, assignment, marshalling, or other winding up
                  referred to in the first sentence of this Section 4.

Subject  to the  payment  in full of all Senior  Indebtedness,  Holder  shall be
subrogated  to the  rights of the  holders  of Senior  Indebtedness  to  receive
payments or distributions of cash, property, or securities of HealthCare or HHC,
as the case may be, applicable to the Senior Indebtedness until the principal of
this note shall be paid in full and no such payments or  distributions to Holder
of  cash,  property,  or  securities  otherwise   distributable  to  the  Senior
Indebtedness shall, as between the Companies,  their respective creditors, other
than the holders of Senior  Indebtedness,  and Holder, be deemed to be a payment
by the  Companies  to or on  account  of this note.  It is  understood  that the
provisions  of  Sections  3 and 4 are solely for the  purpose  of  defining  the
relative  rights of  Holder,  on the one hand,  and the  holders  of the  Senior
Indebtedness  on the other hand,  against the  Companies  and their  properties.
Nothing  contained  in Sections 3 and 4 or elsewhere in this note is intended to
or shall  impair,  as between the Companies  and Holder,  the  obligation of the
Companies,  which is unconditional and absolute,  to pay to Holder the principal
of this note as and when the same  shall  become due and  payable in  accordance
with its terms or to affect the relative  rights of Holder and  creditors of the
Companies  other than the  holders of Senior  Indebtedness,  nor shall  anything
herein or in this note prevent  Holder from  exercising  all remedies  otherwise
permitted by applicable law upon default,  subject to the rights,  if any, under

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<PAGE>

Sections  3 and 4 of the  holders  of Senior  Indebtedness  in  respect to cash,
property,  or securities of the Companies received upon the exercise of any such
remedy.

         5. In the event and during  the  continuation  of any  default of which
Holder  shall have  received  written  notice in the payment of principal of (or
premium,  if any) or interest on any Senior  Indebtedness  beyond any applicable
period of grace,  or in the event that any event of default  with respect to any
Senior  Indebtedness  of which Holder shall have received  written  notice shall
have  occurred  and be  continuing,  or would  occur as a result of the  payment
referred to hereinafter,  permitting the holders of such Senior Indebtedness (or
a  trustee  or  other  representative  on  behalf  of the  holders  thereof)  to
accelerate the maturity thereof, then, unless and until such default or event of
default  shall  have  been  cured or waived or shall  have  ceased to exist,  no
payment  of  principal  of this note shall be made by the  Companies;  provided,
however that such prohibition on the payment of principal of this note shall not
apply if all holders of Senior Indebtedness,  upon receiving written notice from
the Companies requesting permission to make a payment of principal on this note,
fail to notify the Companies in writing within 30 days after the date the notice
requesting such permission is received that such permission is denied.

         6. Nothing contained in Sections 3, 4, or 5 shall prevent the Companies
at any time except  during the  pendency of any of the  conditions  described in
Sections 4 and 5, from making the scheduled  principal  payment  provided for in
Section 1.

         7.  Holder is  entitled,  at its  option,  at any time  prior to 5 p.m.
Eastern Time on August 1, 1999, to convert the principal amount of this note (or
any portion hereof which is $1,000 or an integral  multiple thereof) into shares
of Common Stock of  HealthCare,  as said shares shall be constituted at the date
of conversion,  at the conversion  price of $1.30 principal  amount of this note
for each such share of Common Stock  (calculated  as to each  conversion  to the
nearest  one-thousandth  of a  share),  upon  the  surrender  of  this  note  to
HealthCare  at the  office  of  HealthCare,  accompanied  by  written  notice of
election to convert,  in the form attached hereto as Exhibit A, duly executed by
Holder or by its duly authorized attorney.  Share certificates will be delivered
to Holder within five  business  days. No adjustment is to be made on conversion
for  dividends  on Common Stock issued on  conversion.  HealthCare  shall not be
required to issue fractional shares upon any such conversion,  but shall make an
adjustment therefor in cash equal to the current market value of such fractional
interest  computed to the nearest  thousandth  of a share either on the basis of
the last reported  sale price of the Common Stock on the Alberta Stock  Exchange
(or, if not listed on the Alberta Stock Exchange, then on such other exchange on
which the  Common  Stock is  listed as  HealthCare  may  designate)  on the last
business day prior to the date of  conversion  or if there shall not have been a
sale on such last business  day, on the average of the bid and asked  quotations
therefor on such  exchange on such last  business  day,  or, if the Common Stock
shall not then be listed on any exchange,  such adjustment shall be made using a
value of $1.30 per share.

      8. The conversion price shall be adjusted from time to time as follows:

             (a)  In case  HealthCare  shall,  at any time or from  time to time
                  while this note is  outstanding,  (i) pay a dividend in shares
                  of its Common Stock, (ii) subdivide its outstanding  shares of
                  Common Stock,  (iii) combine its outstanding  shares of Common
                  Stock  into a  smaller  number  of  shares,  or (iv)  issue by
                  reclassification of

                                      -3-
<PAGE>

                  its shares of Common Stock any shares of stock of  HealthCare,
                  the conversion price in effect immediately prior thereto shall
                  be  adjusted  so  that  upon   surrender   of  this  note  for
                  conversion,  Holder shall be entitled to receive the number of
                  shares of Common Stock or other  securities of HealthCare that
                  it would have owned or have been entitled to receive after the
                  happening of any of the events  described  above had this note
                  been  converted  immediately  prior to the  happening  of such
                  event. Any adjustment made pursuant to this Section 8(a) shall
                  become effective in the case of a dividend on the payment date
                  retroactively to immediately  after the opening of business on
                  the date  following the record date for the  determination  of
                  shareholders entitled to receive such dividend, subject to the
                  provisions of Section 8(c), and shall become  effective in the
                  case  of  a  subdivision,   combination  or   reclassification
                  immediately after the opening of business on the day following
                  the   day   when    such    subdivision,    combination,    or
                  reclassification, as the case may be, becomes effective.

             (b)  Except as herein  otherwise  provided,  no  adjustment  in the
                  conversion  price shall be made by reason of the issuance,  in
                  exchange for cash,  property or services,  of shares of Common
                  Stock, or any securities  convertible into or exchangeable for
                  shares of Common Stock,  or carrying the right to purchase any
                  of the foregoing.

             (c)  If HealthCare shall take a record of the holders of its Common
                  Stock  for  the  purpose  of  entitling  them to  receive  any
                  dividend,  for any  subscription  or  purchase  rights  or any
                  distribution and shall, thereafter and before the distribution
                  to stockholders of any such dividend, subscription or purchase
                  rights or  distribution,  legally  abandon  its plan to pay or
                  deliver  such  dividend,  subscription  or purchase  rights or
                  distribution, then no adjustment of the conversion price shall
                  be required by reason of the taking of such record.

             (d)  No adjustment in the conversion price shall be required unless
                  such  adjustment  would  require an increase or decrease of at
                  least 1 percent in such  price;  provided,  however,  that any
                  adjustment  which  by  reason  of  this  Section  8(d)  is not
                  required  to be made shall be carried  forward  and taken into
                  account in any subsequent  adjustment.  All calculations under
                  this  Section  8 shall be made to the  nearest  cent or to the
                  nearest one thousandth of a share, as the case may be.

         9. In case of any  reclassification  or change of outstanding shares of
Common Stock  issuable upon  conversion of this note (other than a change in par
value,  or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or in case of any consolidation of
HealthCare which one or more other  corporations  (other than a consolidation in
which HealthCare is the continuing  corporation and which does not result in any
reclassification  or change of outstanding  shares of Common Stock issuable upon
conversion of this note),  or in case of the merger of  HealthCare  into another
corporation,  or in case of any sale or conveyance to another corporation of the
property  of  HealthCare  as  an  entirety  or  substantially  as  an  entirety,
HealthCare,  or such  successor or purchasing  corporation,  as the case may be,
Holder  shall  thereafter  have the right to convert this note into the kind and
amount of shares of stock and other securities and property  (including cash) or
any  combination   thereof  receivable  upon  such   reclassification,   change,
consolidation,  merger,  sale, or conveyance by a holder of the

                                      -4-
<PAGE>

number of shares of Common Stock into which this note might have been  converted
immediately prior to such reclassification, change, consolidation, merger, sale,
or conveyance, subject to adjustments which shall be as nearly equivalent as may
be  practicable  to the  adjustments  provided  for in  Section  8 and any  such
adjustments  which  shall  be  approved  by the  Board  of  Directors  shall  be
conclusive  for all purposes of this Section 9. The provisions of this Section 9
shall similarly apply to successive reclassification,  changes,  consolidations,
mergers, sales, and conveyances.

         10. No recourse  shall be had for the payment of the  principal on this
note, or for any claim based hereon, or otherwise in respect hereof, against any
incorporator,  stockholder,  officer,  or director,  as such, past,  present, or
future, of the Companies or of any successor corporations,  whether by virtue of
any  constitution,  statute,  or  rule  of  law,  or by the  enforcement  of any
assessment or penalty or otherwise,  all such liability being, by the acceptance
hereof and as part of the consideration  for the issue hereof,  expressly waived
and released.

         11. The  occurrence  of any one or more of the  following  events shall
constitute an Event of Default under this note:

             (a)  HealthCare  or HHC  shall  fail  to  observe  or  perform  any
      obligation to be observed or performed by them under this note,  under the
      Asset  Purchase  Agreement  effective as of October 31, 1996,  between the
      Companies and Holder,  or under the Security  Agreement within thirty (30)
      days after written notice from Holder to perform or observe the obligation
      or  to  substantially  commence  to  observe  or  perform  and  thereafter
      diligently  complete  observance or performance if complete  observance or
      performance of the obligation is not possible within thirty (30) days;

             (b) Either  HealthCare  or HHC shall be in default under or fail to
      make any  payment of  principal  of or interest  on any  indebtedness  for
      borrowed money in a principal  amount of at least Fifty  Thousand  Dollars
      ($50,000) and such default or failure shall continue beyond any applicable
      grace period;

             (c) Either  HealthCare  or HHC shall admit its inability to pay its
      debts as they mature or shall make an assignment for the benefit of any of
      its creditors;

             (d) Proceedings in bankruptcy,  or for reorganization of HealthCare
      or HHC, or for the  readjustment  of any of  HealthCare's  or HHC's debts,
      under  any  bankruptcy  code or under  any other  laws,  whether  state or
      federal,  for the relief of debtors,  now or hereafter existing,  shall be
      commenced  against or by  HealthCare  or HHC, and such receiver or trustee
      shall not be discharged within sixty (60) days of his appointment, or such
      proceedings shall not be dismissed or discharged within sixty (60) days of
      their commencement;

             (e) A receiver or trustee shall be appointed for  HealthCare or HHC
      or for any  substantial  part of  HealthCare's  or  HHC's  assets,  or any
      proceedings shall be instituted for the dissolution or the full or partial
      liquidation  of  HealthCare or HHC, and such receiver or trustee shall not
      be  discharged  within  sixty  (60)  days  of  his  appointment,  or  such
      proceedings shall not be dismissed or discharged within sixty (60) days of
      their

                                      -5-
<PAGE>

      commencement,   or  HealthCare  or  HHC  shall  discontinue   business  or
      materially change the nature of their respective businesses;

             (f)  HealthCare or HHC shall suffer final  judgments for payment of
      money  aggregating in excess of Fifty Thousand Dollars ($50,000) and shall
      not discharge the same within a period of sixty (60) days unless,  pending
      further  proceedings,  execution has not been  commenced or, if commenced,
      has been effectively stayed.

         12. Upon the  occurrence of an Event of Default,  Holder shall have the
right to accelerate  this note and to declare the entire unpaid  balance  hereof
immediately due and payable.

         13. This note has not been registered under the Securities Act of 1933.
This note has been  acquired for  investment  purposes  only and not with a view
toward distribution or resale, and may not be mortgaged, pledged,  hypothecated,
or otherwise  transferred without an effective  registration  statement for this
note  under the  Securities  Act of 1933 or an  opinion  of  counsel  reasonably
acceptable to counsel for the Companies that  registration is not required under
the Securities Act of 1933. This note is also subject to restrictions imposed by
applicable state securities laws.

         14. This note is exempt from  qualification  under the Trust  Indenture
Act of 1939. Therefore, Holder are aware that certain protections which might be
available under a note issued pursuant to a trust indenture  qualified under the
Trust Indenture Act of 1939 will not be available.

         15. No sinking fund will be  established by the Companies to assist the
Companies in retiring this note upon maturity.

         16.  Holder shall not, by virtue of ownership of this note, be entitled
to any rights of a shareholder of  HealthCare,  but shall be entitled to receive
such annual reports as HealthCare shall distribute to its shareholders.

         17. The  Companies  agree to pay all costs of collection of any amounts
due hereunder when incurred,  including,  without limitation,  attorney fees and
expenses, including on any appeal.

         18. The Companies hereby waive presentment, demand, notice, and protest
and any defense by reason of extension of time for payment or other indulgences.
Failure of Holder to assert any right  herein shall not be deemed to be a waiver
thereof.

         19. This note shall be governed by, and construed in  accordance  with,
the laws of the Commonwealth of Pennsylvania, including matters of construction,
validity, and performance.

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<PAGE>

         20. This note may not be assigned,  transferred,  or  negotiated to any
person by Holder  within 12 months after the date hereof,  except in  accordance
with Regulation 204.011 of the Pennsylvania Code.

                                          HEALTHCARE CAPITAL CORP., an Alberta,
                                          Canada, corporation


                                          By -----------------------------------
                                             Brandon M. Dawson, President


                                          HEALTHCARE HEARING CLINICS, INC., a
                                          Washington corporation


                                          By -----------------------------------
                                             Brandon M. Dawson, President



Accepted:




By ------------------------------

Title ---------------------------

                                      -7-
<PAGE>


                                    EXHIBIT A

                            FORM OF CONVERSION NOTICE


To HealthCare Capital Corp.

The undersigned holder of this note hereby  irrevocably  exercises the option to
convert this note, or portion  hereof  (which is $1,000 or an integral  multiple
thereof)  below  designated,  into shares of Common Stock of HealthCare  Capital
Corp.  in  accordance  with the terms of this note,  and directs that the shares
issuable and deliverable upon the conversion, together with any check in payment
for fractional  shares and the portion of this note representing any unconverted
principal amount hereof, be issued and delivered to the undersigned.

Principal  amount to be converted  (in an integral  multiple of $1,000,  if less
than all):



-----------------------------------



Dated:---------------------                 -----------------------------------
                                            Signature


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